Debt ceiling meeting, U.S. PMIs, Lowe's reports - what's moving markets

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Investing.com -- U.S. lawmakers race to secure a deal to lift the debt limit with a potentially catastrophic default looming only days away. Elsewhere, investors will be watching the release of fresh data on activity in the American service and manufacturing sectors, while Lowe's prepares to unveil its latest results as the quarterly corporate earnings season begins to ebb.

1. 'Productive, not progress'

The scramble in Washington to reach a deal to raise the U.S. debt ceiling has intensified after a crucial meeting between U.S. President Joe Biden and House Speaker Kevin McCarthy failed to produce an agreement.

Biden said the discussions on Monday were "productive," but McCarthy said "no progress" was made in breaking the impasse. Both sides remain at odds over spending plans, although Biden and McCarthy were optimistic that they will eventually find a path toward lifting the $31.4 trillion borrowing limit.

However, McCarthy has flagged that a deal needs to be hashed out this week in order to give Congress time to vote on it before the U.S. crashes into a damaging and unprecedented default.

Treasury Secretary Janet Yellen has reiterated that the federal government could run out of money to pay its bills as soon as June 1. Investors are nervous that this could create ripple effects through global markets.

2. Futures volatile amid debt limit talks

U.S. stock futures were mixed in choppy trading on Tuesday as investors digested comments from Democrats and Republicans on the debt limit negotiations.

At 04:54 ET (08:54 GMT), the Dow futures contract moved down 44 points or 0.13%, S&P 500 futures lost 3 points or 0.07%, and Nasdaq 100 futures rose by 1 point or 0.01%.

The main indices ended the trading day on Monday muted, with the Dow Jones Industrial Average slipping by 0.42% and the benchmark S&P 500 inching only 0.02% higher. The tech-heavy Nasdaq Composite also gained 0.50%.

3. U.S. PMI data ahead

Traders today will also be keeping an eye on the release of the monthly U.S. purchasing managers' index, which is expected to provide insight into how elevated interest rates are impacting the performance of the country's service and manufacturing sectors.

The preliminary PMI reading is projected to show that activity in both industries slowed in May, although the figure for services - a major portion of the world's largest economy - is projected to remain in expansion territory.

Meanwhile, the PMI number for manufacturing is seen touching the 50-mark exactly, a level that denotes neither growth nor contraction.

Elsewhere on the economic calendar, data for new home sales is also due out, with economists estimating that the amount of new single-family properties sold in April dipped compared to the prior month.

4. Lowe's on deck as first-quarter earnings season winds down

Home improvement chain Lowe’s (NYSE:LOW) is set to release its first-quarter results before the start of U.S. trading on Tuesday, headlining a waning stream of U.S. corporate earnings.

Lowe's latest returns are expected to shed more light on the health of the U.S. consumer following a string of numbers from other brand-name retailers last week.

Rival Home Depot (NYSE:HD) and big-box group Target (NYSE:TGT) were both hit by cost-of-living pressures that convinced more shoppers to rein in spending on high-priced discretionary items. Home Depot saw three-month sales drop 4.2%, while quarterly comparable sales at Target were flat.

However, Walmart (NYSE:WMT) posted a stronger-than-anticipated revenue bump and raised its financial outlook. The megachain known for its low-cost offerings was buoyed by solid demand for groceries, a sign that demand is shifting to essential items as inflation eats into customers' wallets.

Other retailers reporting on Tuesday include sports equipment seller Dick’s Sporting Goods (NYSE:DKS) and kitchenware business Williams-Sonoma (NYSE:WSM).

5. Crude prices slip into the red

Oil prices moved slightly lower on Tuesday, paring back earlier gains, with the ongoing uncertainty around the debt ceiling talks denting risk sentiment even as the start of the U.S. driving season edges closer.

At 04:22 ET, U.S. crude futures inched down by 0.12% at $71.96 per barrel, while the Brent contract slipped by 0.10% to $75.89 a barrel.

U.S. fuel consumption is set to pick up with the start of the summer season, which is usually marked by the upcoming Memorial Day weekend at the end of May. This, coupled with disruptions in Canadian supply due to wildfires in the oil-rich Alberta province, has suggested that oil markets may be tighter in the coming months.